Country governance,corruption, and the likelihood of firms’ innovation |
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Institution: | 1. School of Economics and Management, Nanchang University, Nanchang, China;2. Department of Finance, National Central University, Taoyuan, Taiwan;1. School of Business and Governance, Murdoch University, Murdoch, WA, 6150, Australia;2. School of Business and Law, Edith Cowan University, 270 Joondalup Drive, Joondalup, WA, 6027, Australia;1. Nanyang Business School, Nanyang Technological University, Singapore;2. Department of Humanities and Social Sciences, Indian Institute of Technology, Madras, India |
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Abstract: | Using a sample of firms from the World Bank Enterprise Survey for the period 2006–2016 in emerging and developing countries, we find that corruption has a negative impact on the likelihood of innovations, thus supporting the “sanding-the-wheels” hypothesis. Our empirical results also show that corruption at the firm level, in the manufacturing industry, and in regions with the worst governance or that are more corrupt has a significant negative effect on innovation. In addition, country governance plays a particularly important role in innovative activity for corrupt firms. The policy implication is that the government or authority should strengthen the positive role of government effectiveness, rule of law, regulatory quality, and control of corruption in order to improve firms’ innovation within an environment of corruption. |
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Keywords: | Innovation Quality certificates Patents Corruption Government governance O31 D73 C43 |
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